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INTRODUCTION
Industrial Parks, as a very wide spread type of Economic Zones, have rapidly
proliferated in the last decades in developing countries, and not only. Two phenomena
contribute to such acceleration: first, all developing countries have shifted their growth
politics toward export oriented strategies, which are considered optimal to increase
employment and facilitate the entrance in the global economy (Giles, Williams, 2000).
Second, with the intensification of global competition, the production of labor-intensive
goods in particular, has shifted toward developing countries, due to their abundant labor
supply and relatively low cost.
The standard definition of an Economic Zone applied by international organizations
(World Bank 1992, UNIDO 1995, ILO/UNCTC, 1988) states that it is an industrial area
that constitutes an island or enclave where the commercial code in force in the host
country (regarding licensing, red-tape procedures, and other free trade barriers) does not
apply.
An Industrial Park adds to the up mentioned features considerable advantages in
1
METHODOLOGY
The methodology used in this study consists mainly in qualitative research
methods. The first part of the study is based on a wide literature review regarding
Economic Zones and Industrial Parks features, advantages, and implementation issues.
IPs contribution in FDIs attraction and competitiveness is discussed in detail, pointing
out some of the preconditions for successful implementation. It also tries to establish the
criteria for IPs performance evaluation.
The second part consists on a wide comparative analysis of Economic Zones and
Industrial Parks initiatives in Balkans countries that intends to explore: EZ 2 and IP3
experience in Balkans countries; their performance in FDI attraction, employment and
general economic development. The most successful models are pointed out, trying to
establish the factors that have contributed to such success, as well as some unsuccessful
models are analyzed in order to understand the reasons behind their failure.
The third part focuses on IP initiatives in Albania. Therere used primary sources by
conducting a series of face to face semi-structured interviews, consisting of open ended
questions. The interviewed are experts including high rank executives in METE 4,
directors and specialists of IP development Unit near METE, METE specialists for
Economic Zones, State Aid, Commercial Policy, representants of assistance programs in
Albania (UNDP Trade Liberalization and Promotion Project) and former directors and
specialists of former Free Zones National Unit.
IN
4.
2
EZ Economic Zones
IP Industrial Park
4
METE Ministry of Economy, Trade, and Energy
3
5.
6.
to make the object of any pending litigation in respect of its legal status; If more than
one incentive regime is applicable to an investment, the investing company has to
explicitly choose one of them (Pirciog, EURECO, 2005).
Local Chambers of Commerce have been assigned to provide full support to
companies operating in industrial parks in obtaining the necessary authorizations and
clearances.
Companies operating in industrial parks benefit from the following incentives,
reinforced by the Fiscal Code: Exemption from payment of taxes for modifying the land
destination or land withdrawal from the agricultural use in order to be used for the
industrial park; Deduction of 20 % out of the value of the new investments in industrial
park applied in constructions for transporting and distributing electric and thermal
power, natural gas and water, etc;
By this time in Romania there are more than 45 industrial parks according to the
Romanian Agency for Foreign inestment, although the IBC Focus Report includes a
database of 91 Induastrial Parks and 30 Logistic Parks. As many as 189 new
multinational companies are expected to invest in Romania in the next decade
Serbia: Up to 2009 Serbia counts 64 planned Industrial Zones Parks, of which
only one refers to a brownfield locality revitalization of the old industrial zones in
Smederevo, while the others refer to greenfield IZs and IPs.
One of the IPs that have received greater attention is the one of Indija, which has
attracted in the last 5 years more than 300 million EUR foreign investments. Actual
investors include Microsoft, Groundfos GROUP, TerraProduction, Thyssenkrupp,
Monbat, Henkel, Bauerhin, Esca Food Solutions, Lagermax, Gombit, Remax, VanCo,
etc.
Incentives include : Corporate tax rate of 10%; 10 year Tax Holiday for investing over
EUR 7.5 million and creating 100 jobs; Tax credits for investment in fixed assets up to
80% of assets value; Various government subsides for creating new jobs; Carrying
Forward of Losses for up to 10 years; Tax Exemptions for Concessions for 5 years; Tax
credits for employing new workers for 2 years in the amount of 100% of gross salaries
(Zekovic, 2009).
Turkey: According to the investment program of the Ministry of Industry and
Commerce of Turkey in 2005, 116 industrial parks (in part of which infrastructure
construction was still going on) were part of this program (Trk, 2006). The first IP in
Turkey Is Bursa Industrial Park established on 1968.
One of the most well known is Gebze Industrial Park (GOSB, Gebze Organize
Sanayi Bolgesi), created in Istanbul on 1986, is the first private park in Turkey. In these
last years there were located several global companies like Alarko Carrier, ColgatePalmolive, Procter & Gamble, Corning Cable, Roche, etc. With the termination of the
second and third phase, GOSB plans to accommodate 400 companies with a total
investment of 6 billion $ and 45.000 jobs. GOSB is recognized as best-practice by
many national and international organizations due to effective and transparent
functioning of the regulatory authority, and also due to the ability to employ private
resources in order to create a world class physical infrastructure.
At the same time GOSB is following ambitious projects like GOSB Techno park,
which accommodates 65 high-tech SMEs focused on research and development
projects. Some of GOSB advantages are as follows:
1. Strategic location: 30 minutes from Istanbul (the largest market, and the highest
quality human resources in Turkey), 30 minutes from Kocaeli, the province with the
highest GDP per-capita in Turkey and highest industrial density. It is located near TEM
highway, a 6 lane highway connecting Ankara, Istanbul and Edirne, a location near the
border and an important gateway to Europe. Low transport costs due to proximity to
Derine and Haydarpaa seaports and to the Sabiha Gken airport.
2. Highly qualified, affordable and available workforce.
3. Quality of infrastructural services. World class standards and many solutions to
make industrialists productive activities easier. Apart energy, telecommunication,
natural gas, water, waste and waste water, fire safety and security services, GOSB
provides fiber optic connection for all companies with the vision to become a smartzone. Another project on the way is telecom which makes international phone calls
even cheaper than local calls, while calls between companies inside GOSB are free.
4. Economies of scale in buying most of utility services which can be offered to the
entrepreneurs at cheaper rates than the market, but also in an reliable and efficient way.
5. Consulting services to minimize the regulatory burden for the investors. GOSB
functions as a true one-stop-shop which is another attractive factor for companies to
invest there.
Albania: Actually speaking, there are 7 Economic Zones with the status of
Industrial Park approved, of which 2 have been identified and proposed by METE
structures (the zone of Spitalla Durres and the zone of Elbasani former metallurgic
plant brownfield), and the other 5 are unsolicited proposals from private investors or
local government.
The Albanian government has applied a set of liberal fiscal policies during the last
years. These policy measures consist of: Reduction of corporate and personal income
taxes from 20 %, implementing a Flat tax of 10% since 1 January 2008; Tax rates
10% on personal income tax; Unification of the simplified profit tax and the tax on
small business. Local authorities are now responsible for the collection of the new tax;
Reduction of the fiscal burden of social security paid by employers from 29% to 20%; A
30% reduction of electricity rates for businesses; A tax exemption of dividends
designated for investments.
Table 1. Industrial Park Projects in Albania
Zones and location
Proposal
1. Shngjin
Industrial Park, surface
3.2 ha
ATX
International
develop/ operate
for 35 years
AIIOA
17,054,152
16,374 jobs
METE
Shkodra
Municipality
Revitalization of brownfield
2. Koplik
Industrial Park, surface
61 ha
3. Spitall, Durrs
Industrial Park, surface
850 ha
4. Shkoder
Industrial Park, surface
130 ha
Destination
Investment Value
5. Vlor
Industrial Park, surface
125 ha
Idea Vlora
20,819,797
6. Elbasan
Industrial Park, surface
254.7 ha
7. Durrs
Proposal for Free Zone
at Durrsi Port
METE
KURUM Steel
Co Sh.p.k.Tiran
Revitalization of former
industrial metalurgic plant
area.
Ship repair activities.
Construction of new vessels.
8. Vlor
Proposal for Free Zone
and containers port at
Triport, Vlora
ZumaX LTD
Containers
18,586 jobs
7.3 million
600 jobs
1.7 billion
Source: METE
Albania, in spite of being a small market, may represent a very interesting location
for FDIs because of its particular geographical position and proximity to the European
market. It is crossed by Corridor VIII a long-term planned traffic axes development of
the European Union. This corridor runs from South Italy to Varna on the Black Sea and
is gaining importance because up to now functioning connections like Pireus,
Thesaloniki and Bosforus, are facing and will continue to face lack of capacities and
delays. Other factors that attract investors attention are: a dynamic work force of young
age, low labor costs and relatively high economic growth rates in comparison to the
neighboring countries.
These factors alone are not sufficient to create an attractive climate for investments
without a competitive IP infrastructure, which will serve to overcome the deficiencies
Albania has in transport and utilities infrastructure.
Other factors may hinder the implementation of IP projects in Albania leading to
the attraction of an insufficient number of investors. These factors are mainly related to
the image and attractiveness of Albania - endangered by the lack of political stability,
corruption, property issues, lack of a strong and constant support from the government,
or even lack of information regarding the opportunities Albania offers to foreign
investors that derive by poor IPs marketing.
access to larger markets: Romania and Bulgaria being part of the EU, while Turkey being
a strategic joint between two continents Europe and Asia. EU membership has offered
Romania and Bulgaria extra financing advantages, although privately owned IP s have
resulted in some cases equally successful.
Location is another very important factor that every country seem to have taken in
consideration when selecting between IP projects, choosing strategic transport locations.
Location, stability, market size, incentives, input costs and IP infrastructure are some
of the most important factors that determine IPs success in attracting FDI s. But as we
mentioned before, there are other objectives that countries seek to attain by IP
establishment, so success of IPs initiatives is also related with their contribution to
industrial and technological development, volume of exports, employment, human
resources development etc. Each country, in accordance with their specific national
development objectives, offers differentiated performance oriented incentive packages.
Since some of these objectives cannot be easily measured in the short run (such as
technological or human resource development, or exports), most of the countries analyzed
use the following criteria to measure IP performance:
1.
2.
3.
From the analysis of the Balkans countries IPs, some of the most important success
factors result to be:
Strategic geographical location
Political stability
Excellent IP infrastructure
Interesting market size, or access to larger markets (EU)
Strong support from the government
Performance oriented incentive packages
Support from EU funding
IP government
Reasons for Industrial Parks not being able to reach success
1. Inconvenient location selection of the industrial park. Location selection of
industrial parks is done according to administrative criterions instead of economic
criterions. Establishment on agricultural land or touristic sites, damaging actual
economic activities. Also, sometimes feasibility studies are carried out only formally
(Trk, 2006).
2. Lack of sufficient financing causing delays in the construction of IP s
infrastructure. Considering that one of the main advantages of IP initiative is offering
quick ready solutions for investors who are seeking a location, any delay means losing
chances to find investors.
3. Lack of clear selection criteria for IP developers and lack of performance criteria
for users, which can lead to the concentration inside the IP s of passive users, minimizing
the positive impacts expected.
4. Lack of coordination. There exist clear policies regarding the selection of the IP
projects and developers, for example economical priority of the region, but sometimes
no analysis exist to determine which are these regions. Also, being eager to wellcome
any investment proposal, can cause concentration in the IPs of industries interesting
mainly for the investor (labor intensive), while the major benefits from IPs are achieved
from attracting industries that can contribute in the general industrial and technological
development of the host country.
5. Poor IPs marketing.
6. Lack of sustainable and consistent support from the government.
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